The OPEC+ group is likely to extend the latest round of oil production cuts until the end of the first quarter of next year at its meeting, in a bid to provide additional support to the oil market. The group is due to meet on Thursday. These intentions to possibly extend the round of cuts were told to Reuters by four OPEC+ sources.
OPEC+, which produces about half of the world's oil, aims to phase out production cuts by 2025. But slowing global demand and rising production outside the group are hampering the plan and putting pressure on prices.
Despite the group's supply cuts, the global price of Brent crude has been stuck in the $70-$80 a barrel range for most of this year.
OPEC+ members are cutting production by 5.86 million barrels a day, or about 5.7% of global demand, as part of a series of measures agreed from 2022 to support the market.
In January, the eight countries participating in the latest OPEC+ cuts of 2.2 million bpd were due to increase production by 180,000 bpd - a fraction of the total. The increase had been delayed since October due to falling prices.
Concerns that the US Federal Reserve may not cut interest rates at its December meeting limited oil price gains and offset positive signals from China, where the purchasing managers' index rose to a seven-month high in November.
The likely extension of production restrictions will support prices in the short term, pushing Brent towards $72.3 per barrel.
The overall recommendation is to buy Brent oil.
Profit could be taken at 72.30. A stop loss could be set at 71.50.
The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, does not exceed 1% of your deposit.
This content is for informational purposes only and is not intended to be investing advice.
